Spring has finally arrived in Seattle, the cherry trees are blooming and rainbows of Tulips are everywhere. Seattle is truly a beautiful place this time of year and our weather is absolutely wonderful now until late October. Spring historically is usually the time the Seattle Real Estate Market starts to bloom as well….but will that happen this year even though the last three years have been very difficult at best.

Most of the local and national media reports still say that Seattle is still experiencing falling home prices. On the Radio show I do every month I was on with a local real estate reporter that reported again reported that median homes prices in Seattle and King County continue to fall. First of all median home prices do not accurately portray what is happening in any real estate market let along Seattle or King County. Let me explain more about that in a bit. First however Seattle, Bellevue, Kirkland as a general rule have a very different real estate market than areas outside of Seattle, Bellevue or Kirkland. The real estate market is some like microclimates, rain in one area and sun in the neighboring area. If you go the center of Seattle say Queen Anne and from there you draw 5-mile concentric circles the farther out you go the weaker the real estate market. So using Seattle as an example, prices are stronger on Queen Anne than they are in Shoreline for example. And if home prices on Queen Anne fell 25% since the end of 2007, prices fell about 30% in Shoreline. This holds true for Bellevue and Kirkland as well.

OK, now lets talk about those Median Prices. Median is a mathematical result that indicates that one half of the group is higher and one half lower. Median price of 101 sold homes would be that price which is lower than 50 of the prices and also higher than 50 of them. So Median price is really determined by the sales mix. So if more lower priced homes sell then the median price is lower. And for the past year most homes that sold were lower priced homes but that doesn’t mean that the higher priced homes are selling for less. In many cases or neighborhoods the higher priced homes are sell and their prices have been pretty stable the last 12 months.

Do not confuse Median Price with the Average Price. They can be quite different for the same sample group. For instance, if you are doing a sold properties report and the homes are very evenly distributed; the median price and average price might be very similar. However, if the homes sold were weighted more to one end or the other of the price spectrum, then the median and average could be quite different.

One of the favorite Headlines over the past year is that “Home Prices Continue to Fall”. For many months now the media has been reporting that the Median Price of homes in King County has been falling. In some cases depending on location this is true, but for the main neighborhoods in Seattle and Bellevue this has not been the case. On my radio show each month I’ve been talking about this very topic and advising folks that if they are planning on buying this could be one of the best times in many decades to buy a home. Prices for the close-in neighborhoods did adjust down about 25% from the high in November 2007, but for the last year prices in those neighborhoods have pretty much remained constant, with a few exceptions where prices have gone up some.

What happened was that more lower priced homes sold than higher priced homes therefore reducing the Median price. But if you went back and calculated Average prices they remained pretty stable. However the farther you go out from the center of the city the lower the prices are, and that was even true when our real estate market was white hot. There is something to the saying that the three most important things in real estate are location, location and location.

So what is the Seattle Real Estate market like today? That depends on what location you may be interested in. But lets take a look at the close-in neighborhoods in Seattle or even the Eastside (Bellevue/Issaquah/Kirkland/Redmond). Over the past 45 days our market has turned from slow to hot. Boom, just like that, we are seeing multiple offers and bidding wars again. One of the biggest differences I’m seeing now from just a year ago is that high-end homes ($1 million to $5 million) are selling. Many people have figured out that this indeed a great time to buy. Interest rates have been at historic lows and banks are now starting to ease restrictions on loaning money. You still have to have good credit and put about 20% down but the money is there today while it wasn’t there two or three ago. There are some programs with Freddie and Fanny for 10% down today.

Here’s a great example of what I’m saying here. I have a client that was looking for a new home and they didn’t have to sell their existing home in order to buy. We found a home on the Eastside and paid full price for it in the first few days it was on the market. Some might ask: “Why did you offer full price for it in this market?” Great question! It was because other similar homes in the area were selling at, or even, over full price in the past month or so. There were two other buyers that had been back to see the house more than twice (a pretty good sign that they were really interested in the home). So we asked ourselves “do we want to end up in a competing situation?” The answer was “no,” my clients really liked the house, it was a great fit for them so they offered full price because the home was priced correctly. I would never suggest offering full price for a home that is over priced and there are still lots of those out there, so be careful.

So the offer was accepted and it passed inspection and the appraisal came in on value so all was well. Now the questions was should they get their current home on the market now or wait until they move. It would have been a lot easier on them to just get moved then put their other home on the market as they have two small kids and a dog. I had given them a price about 6 months ago but now I had to “fine-tune” that price. I “fine-tune” a price by placing it correctly in the mix with its competition. What I found was that there was almost NO inventory in their neighborhood and the homes that did come on the market in the two weeks prior to that were selling on 1 or 2 days.

I took all that information to them and suggested that we increase the price we were expected to List at by almost 10% and put it on the market right away. I put the home on the market on a Tuesday evening with no showing until the Brokers Open the next day at noon. By 6:00PM that evening we had one offer in hand and 2 more saying they would write an offer by the next day. The next day at 6:00PM when we looked at the offers we had a total of 4 offers. Three of the offers were over the asking price. The one offer at the asking price had waived the inspection however. We took the best offer in terms of price and financing strength and the home was SOLD at about 6% over the asking price.

We have to be careful here and not get too carried away from this experience however. Homes have to be good homes and priced correctly to sell today and that is healthy for the market. What we need to for inventories to start to increase some to balance out the market. Buyers have waited a long time now to even think about buying. Prices have leveled off and have been pretty stable now in these close-in neighborhoods for about a year now and interest rates will need to start increasing over time. This is a great time to buy and unless you bought your home in 2005 to later this could be one of the best times to sell that we have seen since the end of 2007. And some people predict that we may see as much as a 10% to 15% increase in home prices by 2013. There are too many questions I have about the national economy to make that prediction right now however, but things are heading in a positive direction for both homebuyers and sellers right now. Stay tuned for the next exciting chapter in Seattle Real Estate.

Reader Comments (10)

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